Halifax to reduce maximum working age for some mortgage applicants
Halifax is reducing the maximum age you can apply for a mortgage for some applicants - and it could make payments more expensive.
The high street bank is reducing the maximum age it will consider earned income for mortgage applicants from 75 years to 70 years old. The move to cut the applicable working age will reduce the amount of time someone can borrow by five years. Halifax confirmed that the new mortgage age will be introduced on March 18 and will apply to:
- Remortgage applications with any capital raising/additional borrowing
- Some purchase and remortgage applications because of the level of credit score achieved and overall credit profile.
The high street bank told the Mirror that for all other applications it will continue to use the maximum working age as 75, which it says will "apply to the majority". The maximum age allowed at the end of a mortgage term will also still remain at 80.
However, this is a still major U-turn by the bank as it only increased its applicable working age to 75 in August last year. In a comment made to the Newspage news agency, Darryl Dhoffer, adviser at The Mortgage Expert, said the move was "outrageous" and that Halifax appeared to be "tightening the screws on the very borrowers who need them the most."
He added: "High mortgage rates and shorter terms are a recipe for disaster, pushing even more borrowers into debt and hardship."
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Other high street lenders that have its maximum mortgage age at 75 include Nationwide and Natwest however Barclays does have its lower at 70.
Adrian Lowery, Financial Analyst at wealth manager Evelyn Partners, noted that Halifax looks to be "reining back on lending that is now perceived as risky" and recommended that borrowers who were banking on obtaining or retaining a Halifax loan that allows them to repay past 70 years of age go to back to the broker.
He said: "Borrowers are usually asked when they intend to retire and most lenders have an upper age limit beyond which they are reluctant to lend. Even to take a mortgage term past the state pension age, the lender will often ask for the borrower to explain their future repayment strategy – and lenders would argue this is disciplined lending that prevents people taking on more than they can reasonably expect to repay.
“Nevertheless, tightening up what was for eight months or so a more relaxed approach that afforded borrowers some flexibility to keep monthly repayments down at a time of sky-rocketing mortgage rates, will catch many borrowers off guard.
“Loan rates have retraced a bit but remain high, compared to recent history at least, and this could force many borrowers to reduce the length of their terms in future, increasing their monthly mortgage payments. Marathon mortgages have become popular among many homebuyers in an effort to keep monthly costs down, but those in their middle age could be worst-affected, as this is the cohort most likely to look at extending their loan term into retirement, possibly for their ‘forever home’."
A spokesperson for Halifax Intermediaries told the Mirror: "These changes have been made as part of a regular review of our lending criteria and will ensure we can continue to lend responsibly to a broad range of customers. For all other applications we will continue to use a maximum working age of 75.”
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